CFPB Expands Its Enforcement Efforts Against Payday Lending

17 July 2014 Consumer Class Defense Counsel Blog

In November, 2013, the Consumer Financial Protection Bureau announced its first enforcement action against a payday lender. Cash America International was fined $5 million and was ordered to refund $14 million to its borrowers due to violations of the Military Lending Act. Recently, the CFPB took action against one of the nation’s largest payday lenders, ACE Cash Express, “for inducing payday borrowers into a cycle of debt”, according to CFPB Director Richard Cordray.

ACE agreed to pay a civil penalty of $5 million, and to pay up to $5 million in refunds to its customers. Although ACE maintains that the practices that the CFPB found illegal ceased in 2012, and involved a very small number of its borrowers, “ACE used false threats, intimidation, and harassing calls to bully payday borrowers” according to Director Cordray.

The CFPB found that ACE engaged in several unlawful collection practices, including: 1) threatening to sue or criminally prosecute if borrowers did not make payments, even though ACE did not actually sue consumers or bring criminal charges against them for non-payment; 2) threatening to charge extra fees and to report borrowers to credit reporting agencies, even though the debt collectors had no authority to charge collection fees or to report non-payment to credit bureaus; and 3) making an excessive number of harassing collection calls, not only to borrowers, but also to their employers and relatives. The CFPB found that ACE used these tactics to pressure borrowers to take on more debt, which resulted in new fees to ACE. According to Director Cordray, “ACE was relentlessly overzealous in its pursuit of overdue consumers…. Debt collection tactics such as harassment and bullying take a profound toll on people – both financially and emotionally. The Consumer Bureau bears an important responsibility to stand up for those who are being wronged in this process.”

ACE maintains that “over the last two years, ACE has cooperated fully with the CFPB” and has taken voluntary action to improve its regulatory compliance.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services